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The Mississippi Scheme and Its Antecedents: England

England had been gradually making a commerce of her own in the Indies, and all that was required was an official acknowledgment, so that the thunder of her guns should, when required, follow the creaking of her cordage. From the story of this great enterprise, through its first twenty-five years, could be drawn the lesson of such schemes as Law was now formulating. Though it had succeeded, in spite of Dutch and Portuguese opposition, in establishing "factories" when the historic massacre by the Dutch at Amboyna in the Molucca Islands, took place in 1725, the Eastern Company seemed near its dissolution. It was not till the establishment of the Hooghly factory in 1742 that things began to look up. After that, fortune favoured the Company more than she had appeared likely to do at the start. The marriage of Charles II to Catherine of Braganza in 1661 brought progress in its train. Catherine's dower, which included Bombay and so put a part of Portugal's later possessions in British keeping, greatly stimulated the East India Company which thenceforth was able to weather the storms that threatened or assailed.

The privilege of making war on its own account, conceded by Charles II, gave the Company a national importance which was destined to consolidate its interests with those of England itself. So strong did it become that before the end of the eighteenth century it was able to resist the attack on its charter made by a powerful and progressive rival, the "New Company." The rivals, after a few years of pourparlers and tentative efforts, were united in 1708; and thenceforth the amalgamation, under the title "The United Company of Merchants of England trading to the East Indies," was practically unassailable on its own account. It was additionally safe in that it had the protection of the great Whig Party under Godolphin. The capital of the Company, now enlarged to £3,200,000, was lent to the Government at five per cent. interest and was finally merged in the National Funds. The history of the Company, after 1717 does not belong here, as it is only considered as showing that John Law had the experience of an earlier Company similar to his own to guide him in its management if he had chosen to avail himself of it.

The Bank of England was, strangely enough, the project of a Scotchman, William Paterson.

The plan was submitted to Government in 1691 but was not carried into existence for three years.

It was purely a business concern, brought into effective existence through the needs of commerce, the opportunity afforded being the need of the State and the concern of the statesman. It had a capital at first of over £1,200,000, which was loaned to the nation on the security of the taxes when the Charter was signed, there being certain safeguards against the possibility of political misuse. The Controlling Board was to have twentyfive members who were to be elected annually by the stockholders with a substantial qualification.

There were at this time in England private banks; but this was an effort to formulate the banking rights, duties, and powers of capital under the ægis of the State itself. But even so sound a venture, enormously popular from the very first and with the whole might of the nation behind it, had its own difficulties to encounter. Its instantaneous success was an incentive to other adventurers; and the co-operation with government which it made manifest created jealousy with private persons and commercial concerns. Within two years its very existence was threatened, first by the individual hostility of those in the bullion trade, who already acted as bankers, and then by a rival concern incorporated under strong political support. This was the National Land Bank whose purpose was to use the security of real estate as a guarantee for the paper money which it issued for convenient usage. Strong as the Bank of England was by its nature, its popularity, and its support, it was in actual danger until the rival which had never "caught on" to use an apposite Americanismactually and almost instantaneously collapsed. The safety thus temporarily obtained was purchased at the cost to the Government of a further loan of two million sterling-with the value to the contra of an alliance thus begun with the Whig ministry.

A further danger came from the mad and maddening South Sea Scheme five years later; but from which it was happily saved solely through the greater cupidity and daring of the newer company.

The Darien Company, which followed hard on the heels of The African Company, was formed in 1695, by Paterson; on the base of An Act of the Scottish Parliament for the purpose of making an opening for Scottish capital after the manner of the East India Company by which English enterprise had already so largely benefited. Its career was of such short duration and its failure so complete that there was little difficulty in understanding the causes of its collapse. It might serve for a pendant of Lamb's criticism of the meat that was "ill fed and ill killed, ill kept and ill cooked." The Company was started to utilise, in addition to exploiting new lands, the waste of time, energy and capital, between West and East; and yet it was not till the first trading fleet was sailing that its objective was made known to the adventurers. Its ideas of trading were those of a burlesque, and its materials of barter with tropical savages on the criminal side of the ludicrous-bibles, heavy woollen stuffs and periwigs! Naturally a couple of years finished its working existence and "The rest is silence." And yet at the inception of the scheme two great nations vied with one another for its control.

There are those who may say that John Law was not an impostor, but a great financier who made a mistake. Financiers must not make mistakes-or else they must be classed amongst the impostors; for they deal with the goods and prospects of others as well as their own. Law was simply a gambler on a great scale. He led a nation, through its units, to believe that the following of his ideas would lead to success. Financial schemes without good ideas and practical working to carry them out are deceptive and destructive. The Mississippi Scheme is a case in point. If the original intention had been carried out in its entirety-which involved vast pioneering and executive action of present and future generations, and an almost absolute foregoing of immediate benefits-the result would have been of immense service to the successors in title of the original ventures. The assessable value of the real estate conveyed under the Mississippi Scheme to-day equals more than a third of the present gigantic National Debt of France, swollen though the latter is by the Napoleonic wars, the war with Austria, the cost and indemnity of the war with Germany, and, in addition, by the long wars with England and Russia.

If human beings had been angels, content with the prospect of gains in the distant future, Law's schemes might have succeeded. As it was, he, working for his own purposes with an imperfect humanity, can only be judged by results.